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10-Year Treasury Yield Breakout Above 5% Could Pressure Stocks and AI Trade

Ruchir Sharma, founder and CIO of Breakout Capital, warned that a decisive break above 5% on the 10-year Treasury yield could spell trouble for equity markets, particularly the artificial intelligence trade. The 10-year yield touched 5% this week, reaching a 19-year high, before pulling back to 4.94%. Sharma notes that above 5.25%, equity prices historically decline, as the equity-bond correlation turns positive. Higher yields increase the discount rate on future profits, reducing stock values. The Fed raised rates by 25 basis points to 3.75%-4% and signaled further hikes, with inflation above target until 2029. Mega-cap AI companies are increasingly tapping bond markets for infrastructure spending, and Goldman Sachs notes higher capital costs reduce the value of their future cash flows.

• The 10-year Treasury yield touched 5% earlier this week, a 19-year high, before pulling back to 4.94%.
• Breakout Capital's Ruchir Sharma warns that a decisive break above 5% could pressure stocks and the AI trade.
• The Federal Reserve raised the federal funds rate by 25 basis points to 3.75%-4% on Wednesday.

Nvidia CEO predicts 70% revenue growth amid AI infrastructure surge

At the Goldman Sachs Communacopia + Technology conference, Nvidia CEO Jensen Huang reiterated his forecast of 70% year-over-year revenue growth for the next fiscal year, driven by soaring demand for AI infrastructure. Huang emphasized that Nvidia's products are no longer simple chips but massive computing systems costing up to $8.5 million, with thousands shipped. He cited 27% month-over-month growth for the GB200 NVL72 system, combining Grace CPUs and Blackwell GPUs. Huang also addressed concerns about competition from hyperscalers and AI labs building their own chips, as well as startups like Cerebras and Etched, asserting Nvidia's foundational role across the AI ecosystem. He dismissed criticisms of 'circular' investments, claiming $100 billion in verified contracts from AI companies. The company expects to end the current fiscal year at around $400 billion in revenue, with 70% growth implying approximately $680 billion next year.

• Nvidia CEO Jensen Huang reiterated 70% year-over-year revenue growth guidance for next fiscal year.
• Nvidia expects around $400 billion revenue this fiscal year, implying ~$680 billion next year.
• The GB200 NVL72 system, combining 36 Grace CPUs and 72 Blackwell GPUs, saw 27% month-over-month sales growth.

Goldman Sachs Opens New Engineering Office in Bellevue, Wash.

Goldman Sachs announced the opening of a new engineering office in Bellevue, Washington, as part of its ongoing expansion of engineering capabilities.